Wednesday, July 22, 2009

ABI: So Much For the Recovery

Three straight months of apparent stabilization in the American Institute of Architects' Architecture Billings Index did not lead to an uptick, after all.

Instead, the AIA reported this morning that the June ABI rating was 37.7, down more than five points from the 42.9 rating in May. This score indicates a continued overall decline in demand for design services as any score above 50 indicates an increase in billings.

"It appears as though we may not have yet reached the bottom of this construction downturn," said AIA Chief Economist Kermit Baker. "Architecture firms are struggling and concerned that construction market conditions will not even improve as soon as next year. There has also been little movement in terms of stimulus funding allocated for design projects having the desired impact of leading to new work."

The new projects inquiry score was 53.8, the fourth straight month with a score in the mid-50s. May's new projects inquiry score was 55.2, but as we mentioned last month, Baker said at the time that the higher level of inquiries could actually be a negative indicator, as it means clients are playing the competitive field against itself for greater savings, driving down prices for architectural work as a result.

Going further, with billings remaining well below their break-even index of 50, the Architect's Newspaper article we referred to in that post claims that for the time being, this means that payments are continuing to decline. At the time of the article, it had been that way for 16 consecutive months.

The June ABI breaks down by sector as follows: mixed practice (43.5, down from 44.5 in May, 44.2 in April and 44.0 in March); multi-family residential (42.7, down from 45.5 in May and 43.2 in April); commercial/industrial (39.5, down from 43.1 in May and 41.7 in April); and institutional (37.0, down from 38.0 in May and 43.2 in April).

Regionally, the ABI breaks down thusly: Northeast (42.8, down sharply from 48.3 in May and 47.1 in April), South (40.5, down from 41.3 in May and 45.0 in April), West (39.9, up from 39.4 in May, 39.2 in April, and 36.1 in March).